This Cash Rich $10 Mining Stock Worth A Serious Look

I recently came across a mining stock that seems to have all the ingredients for long term growth (Growing reserves, a strong balance sheet and compelling valuations).

HudBay Minerals (NYSE:HBM) - "HudBay Minerals Inc., an integrated mining company, engages in the exploration and development of copper, zinc, and precious metals mines in North and South America". (Business Description from Yahoo Finance)

7 reasons HBM offers solid long term value at just over $10 a share:

If the stock's PE looks somewhat elevated, it is only because the company has over $900mm in net cash (50% of its market capitalization). It also is growing reserves.

The company increased its operating cash flow by over 150% from FY2010 to FY2011.

The stock sells at book value and around 7 times operating cash flow.

The three analysts that cover the stock have price target significantly above HBM's current price. The low target is $15 and the current high target is $21.50.

The stock yields 1.9%. It starting paying dividends last year and I would look for the company to start raising its dividend payout given its huge cash hoard and rapidly increasing cash flow.

The company got significant assets in Peru through the 2011 acquisition of Norsemont. It is building the infrastructure to ramp up production in the country and Peru should be a key growth driver for the company going forward.

The stock is selling just over its long term technical support levels (See Chart)

(click to enlarge)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HBM over the next 72 hours.

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